With the signing of the Housing and Economic Recovery Act (HERA), came a tax credit of up to $7500.00 
to first time homebuyers (defined as not having owned a home in the past 3 years)! The amount of the credit (NOT a deduction - an actual CREDIT) is based on whether the homebuyer(s) is single or married and their annual income.
To be eligible for this credit, the purchase must have been made between April 9, 2008 and before July 1, 2009. This means there are many, many homebuyers that may already qualify and may not yet know it!
Here's how it works:
The tax credit is equal to up to 10% of the value of your home, up to $7,500.
If you are single and your income is less than $75,000, you earn 100% of the credit; if you make more than $75,000 the amount of credit phases out (at $95,000 you no longer qualify for any credit.)
Married couples will qualify for a full credit if they make less than $150,000 jointly; and phases out at $170,000.00.
IT DOES HAVE TO BE REPAID! After two years of the credit, assuming you qualified for the full $7,500, you would repay the loan at $500 per year for 15 years (run that one on the calculator! You get $7500, you repay $7500!) If your home sells prior to the repayment, the unpaid amount is due upon sale, provided there is equity to repay it from.
Realtor Research has put together a WONDERFUL five page definition with charts to help explain this credit in detail: 1st Time Homebuyer Tax Credit Information
Take this form to your accountant or CPA to further discuss the pros and cons of the credit and qualification criteria.
Views and opinions expressed on this site are not necessarily those of WR Starkey Mortgage.
Ruth Vogt, Branch Manager
Colorado LMB #LMB100023827
Ruth:
Thanks for the post. The phase out information is good to know. With the DPA going away October 1, this is will a good thing to use. In Oklahoma, I understand we are still going to have a state Bond Program for first time buyers, but no national programs.
Realtors are going to need to work very closely with their trusted L/O's in the coming weeks and months to understand and implement the few special programs out there. Don't you think we will be working with better qualified buyers in the near future?
Ruth - You did an excellent job of summarizing the tax credit in terms that everyone can understand.
National DPA going away? Not really sure at this point! Did you know the day after the Housing Relief Bill was signed, that a new bill was introduced in the House? HR 6694 describes it in detail. It's believed to have a chance of going through due to the tighter qualifications standards.
And yes! I do agree that we will be working with much better qualified buyers in the near future - especially when FICO 08 rolls out (see one of my previous posts regarding the details, if interested.)